Wastewater and Surface Water Management Financial Report November 2014

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1 Wastewater and Surface Water Management Financial Report November 2014 City of Tacoma Environmental Services Prepared by Eun Joo Ebenhoh

3 Table of Contents Management s Discussion and Analysis... 3 Joint Financial Statements... 5 Financial Statements by Utility Notification These financial statements are interim, unaudited reports prepared primarily for the use of management. Not all transactions reported in these statements have been recorded on the full accrual basis of accounting or in accordance with generally accepted accounting principles. Immaterial differences may occur due to rounding. 1

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5 Management s Discussion and Analysis The management discussion and analysis (MD&A) is prepared for quarter-end reports: March, June, September, and December. Please refer to the prior quarter-end MD&A for interim months. 3

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7 Joint Financial Statements 5

8 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Net Position (Unaudited) November 30, Increase (Decrease) ASSETS Current assets: Operating cash and equity in pooled investments: Operating Fund $ 24,552,327 $ 32,454,128 $ (7,901,801) Rate Stabilization Fund 25,000,000 25,000,000 - Total operating cash and equity in pooled investments 49,552,327 57,454,128 (7,901,801) Accounts receivable 9,174,318 9,464,208 (289,890) Allowance for uncollectible accounts (3,656,589) (4,340,716) 684,127 Unbilled revenue 5,900,000 5,610, ,000 GASB 31 mark to market adjustment 2, ,560 (694,914) Inventory 1,001, , ,004 Prepaid expenses 845, , ,059 Grants receivable 1,196,829 60,978 1,135,851 Notes and contracts receivable 166, ,281 8,107 Total current assets 64,182,645 70,594,102 (6,411,457) Restricted cash and equity in pooled investments: Bond reserve and debt service accounts 11,761,782 11,761,782 - Customer deposits - detention ponds - 104,604 (104,604) Construction accounts 738,504 12,171,162 (11,432,658) Total restricted cash and equity in pooled investments 12,500,286 24,037,548 (11,537,262) Capital assets: Land and easements 19,473,992 10,590,148 8,883,844 Buildings 151,395, ,231, ,464 Buildings - capital lease 30,272,000 30,272,000 - Machinery and equipment 153,449, ,504,322 9,945,289 Transmission lines and other improvements 333,642, ,126,155 27,516,168 Computer software 7,879,371 7,429, ,425 Less: accumulated depreciation (220,292,320) (205,996,425) (14,295,895) Assets in service, net of accumulated depreciation 475,820, ,157,596 32,663,295 Construction in progress 48,375,201 50,437,385 (2,062,184) Total capital assets 524,196, ,594,981 30,601,111 Other noncurrent assets 3,648,101 3,535, ,464 Total assets 604,527, ,762,268 12,764,856 DEFERRED OUTFLOWS OF RESOURCES Unamotized bonds refunding costs 1,042,167 1,103,471 (61,304) Total deferred outflows of resources 1,042,167 1,103,471 (61,304) TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 605,569,291 $ 592,865,739 $ 12,703,552 These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 6

9 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Net Position (Unaudited) November 30, Increase (Decrease) LIABILITIES Current liabilities: Accounts payable $ 2,390,814 $ 974,746 $ 1,416,068 Accrued wages payable & compensated absences 1,291,603 1,235,207 56,396 Accrued taxes payable 119, ,240 11,077 Accrued liability - low income - (26,215) 26,215 Due other governmental units 280, ,971 (10,568) State Revolving Loan interest payable 173, ,788 (11,049) Current portion of long-term debt - State Revolving Loans 3,662,252 3,596,490 65,762 Current portion of capital lease obligation 52,000 50,000 2,000 Environmental liabilities 578, ,730 (29,327) Total current liabilities 8,548,531 7,021,957 1,526,574 Current liabilities payalbe from restricted assets: Deposit payable - detention ponds - 104,604 (104,604) Bond interest payable 2,188,508 2,188,508 - Total current liabilities payable from restricted assets 2,188,508 2,293,112 (104,604) Noncurrent liabilities: Long-term debt - revenue bonds 93,209,838 93,529,171 (319,333) Long-term debt - State Revolving Loans 51,980,370 55,642,623 (3,662,253) Capital lease obligation 27,444,000 28,046,000 (602,000) Compensated absences 2,684,113 2,444, ,751 Net OPEB obligation 1,967,642 1,671, ,522 Environmental liabilities 500, ,000 (50,000) Total noncurrent liabilities 177,785, ,883,276 (4,097,313) Total liabilities 188,523, ,198,345 (2,675,343) DEFERRED INFLOWS OF RESOURCES Rate stabilization 25,000,000 25,000,000 - Total deferred inflows of resources 25,000,000 25,000,000 - NET POSITION Net investment in capital assets 391,241, ,810,640 23,431,275 Restricted for bond reserves 9,573,274 9,573,274 - Unrestricted (8,768,899) (716,520) (8,052,380) Total net position 392,046, ,667,394 15,378,895 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION $ 605,569,291 $ 592,865,739 $ 12,703,552 These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 7

10 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Revenues, Expenses, and Changes in Net Position (Unaudited) November Year-to-Date % Chg OPERATING REVENUES Wastewater residential $ 35,988,164 $ 34,091,356 6% Wastewater commercial and public authorities 18,574,132 18,012,712 3% Surface water 26,625,799 24,879,325 7% Other revenues 1,136, ,008 19% Total operating revenues 82,324,831 77,938,401 6% OPERATING EXPENSES Business operation detail: Revenue and accounting (2,674,450) (522,176) 412% Community relations 410, ,972 24% Assessment 2,525,011 1,460,068 73% Business operation 4,260,615 2,153,036 98% Source control 2,979,976 3,234,231 (8%) Customer service 780, ,749 (1%) Wastewater treatment by other 2,272,825 2,170,876 5% CTP parts room 105,127 99,766 5% Biosolids operation 609,866 2,353,751 (74%) Business operation 11,269,438 12,065,273 (7%) Operations and maintenance detail: Plant #1 6,650,720 5,255,564 27% Biosolids maintenance 92, ,174 (52%) Plant #3 866, ,492 7% Pumping 1,958,370 1,752,331 12% Transmission 7,770,449 7,181,178 8% Plant #1 maintenance 5,664,480 4,466,319 27% Administration 378, ,551 (17%) Plant #3 maintenance 756, ,438 59% Holding basins 36,055 9, % Operations and maintenance 24,174,554 20,604,319 17% Science & engineering detail: Engineering 2,249,269 2,175,410 3% Environmental program 3,822,817 3,238,372 18% Construction support 696, ,185 32% Laboratory 1,565,438 1,777,851 (12%) Site development 88,938 - n/a Asset management 152,659 - n/a Open space 197,203 - n/a Private development 600,503 (18,583) (3,331%) Natural Resource Damage Consent Decree (NRDA) 79,861 10, % Detention ponds 1,945 6,657 (71%) Expense construction 1,486, , % Science & engineering 10,941,309 7,933,616 38% Total divisional operating expenses 46,385,301 40,603,208 14% These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 8

11 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Revenues, Expenses, and Changes in Net Position (Unaudited) November Year-to-Date % Chg OPERATING EXPENSES (Continued) Other expenses detail: Insurance $ 425,984 $ 413,511 3% Taxes 1,095,392 1,317,496 (17%) IT services 2,974,515 2,888,515 3% Customer service 3,447,981 3,435,304 0% Other 7,943,872 8,054,826 (1%) Depreciation 13,010,442 12,369,166 5% Total operating expenses 67,339,615 61,027,200 10% Net operating income 14,985,216 16,911,201 (11%) NONOPERATING REVENUES (EXPENSES) Investment income 547, ,648 (38%) Rental income 358, ,993 2% Bond interest expense, net of capitalized interest (2,847,524) (2,924,776) (3%) Interest on long-term debt - State Revolving Loans (971,488) (1,030,848) (6%) Interest on capital lease (1,363,879) (1,384,999) (2%) Amortization of premium, discount, and refunding costs 236, ,519 N/A Other nonoperating revenues 24, ,228 (83%) Other nonoperating expenses (9,966) (137,951) (93%) Total nonoperating expenses (4,025,814) (3,871,185) 4% CHANGE IN NET POSITION Net position before capital contributions and transfers 10,959,402 13,040,016 (16%) Contributions: Cash 122, ,657 15% Capital related grants 1,154, , % Donated fixed assets 218, ,531 (19%) Transfers - capital related (146,616) 75,575 (294%) Transfers - operating related - (168,035) (100%) Transfers - gross earnings tax (6,621,241) (6,359,462) 4% CHANGE IN NET POSITION 5,687,869 7,180,443 (21%) TOTAL NET POSITION- BEGINNING 386,358, ,486,951 5% TOTAL NET POSITION- ENDING $ 392,046,289 $ 376,667,394 4% These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 9

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13 Financial Statements by Utility 11

14 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Net Position (Unaudited) Wastewater Surface Water November 30, November 30, ASSETS Current assets: Operating cash and equity in pooled investments: Operating Fund $ 9,737,534 $ 19,589,896 $ 14,814,793 $ 12,864,232 Rate Stabilization Fund 17,000,000 17,000,000 8,000,000 8,000,000 Total operating cash and equity in pooled investments 26,737,534 36,589,896 22,814,793 20,864,232 Accounts receivable 5,796,384 5,958,389 3,377,934 3,505,819 Allowance for uncollectible accounts (1,876,563) (2,435,003) (1,780,026) (1,905,713) Unbilled revenue 3,750,000 3,772,000 2,150,000 1,838,000 GASB 31 mark to market adjustment 1, ,621 1, ,939 Inventory 1,001, , Prepaid expenses 813, ,306 31,892 35,682 Grants receivable - - 1,196,829 60,978 Notes and contracts receivable 166, , Total current assets 36,390,081 45,939,165 27,792,564 24,654,937 Restricted cash and equity in pooled investments: Bond reserve and debt service accounts 7,062,999 7,062,999 4,698,783 4,698,783 Customer deposits - detention ponds ,604 Construction accounts 721,600 1,371,409 16,904 10,799,753 Total restricted cash and equity in pooled investments 7,784,599 8,434,408 4,715,687 15,603,140 Capital assets: Land and easements 7,488,228 7,488,228 11,985,764 3,101,920 Buildings 148,930, ,682,708 2,465,530 2,548,742 Buildings - capital lease 16,271,200 16,271,200 14,000,800 14,000,800 Machinery and equipment 148,743, ,876,087 4,706,109 4,628,235 Transmission lines and other improvements 188,175, ,992, ,467, ,133,359 Computer software 4,693,939 4,547,056 3,185,432 2,882,890 Less: accumulated depreciation (178,440,711) (167,578,198) (41,851,609) (38,418,227) Assets in service, net of accumulated depreciation 335,861, ,279, ,959, ,877,719 Construction in progress 30,982,128 38,362,501 17,393,073 12,074,884 Total capital assets 366,843, ,642, ,352, ,952,603 Other noncurrent assets 2,377,047 2,264,583 1,271,054 1,271,054 Total assets 413,395, ,280, ,131, ,481,734 DEFERRED OUTFLOWS OF RESOURCES Unamotized bonds refunding costs 311, , , ,094 Total deferred outflows of resources 311, , , ,094 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 413,706,536 $ 416,609,911 $ 191,862,755 $ 176,255,828 These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 12

15 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Net Position (Unaudited) Wastewater Surface Water November 30, November 30, LIABILITIES Current liabilities: Accounts payable $ 1,806,186 $ 792,021 $ 584,628 $ 182,725 Accrued wages payable & compensated absences 907, , , ,679 Accrued taxes payable 72,510 82,133 46,807 26,107 Accrued liability - low income - (17,646) - (8,569) Due other governmental units 280, , State Revolving Loan interest payable 168, ,481 5,071 5,307 Current portion of long-term debt - State Revolving Loans 3,642,244 3,577,053 20,008 19,437 Current portion of capital lease obligation 27,950 26,875 24,050 23,125 Environmental liabilities , ,730 Total current liabilities 6,905,618 5,796,416 1,642,913 1,225,541 Current liabilities payalbe from restricted assets: Deposit payable - detention ponds ,604 Bond interest payable 737, ,283 1,451,225 1,451,225 Total current liabilities payable from restricted assets 737, ,283 1,451,225 1,555,829 Noncurrent liabilities: Long-term debt - revenue bonds 30,747,645 30,823,110 62,462,193 62,706,061 Long-term debt - State Revolving Loans 51,583,234 55,225, , ,144 Capital lease obligation 14,751,150 15,074,725 12,692,850 12,971,275 Compensated absences 2,025,564 1,878, , ,298 Net OPEB obligation 1,516,485 1,243, , ,978 Environmental liabilities , ,000 Total noncurrent liabilities 100,624, ,244,520 77,161,885 77,638,756 Total liabilities 108,266, ,778,219 80,256,023 80,420,126 DEFERRED INFLOWS OF RESOURCES Rate stabilization 17,000,000 17,000,000 8,000,000 8,000,000 Total deferred inflows of resources 17,000,000 17,000,000 8,000,000 8,000,000 NET POSITION Net investment in capital assets 267,124, ,615, ,117, ,194,718 Restricted for bond reserves 6,325,716 6,325,716 3,247,558 3,247,558 Unrestricted 14,989,655 25,890,054 (23,758,554) (26,606,574) Total net position 288,439, ,831, ,606,732 87,835,702 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION $ 413,706,536 $ 416,609,911 $ 191,862,755 $ 176,255,828 These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 13

16 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Revenues, Expenses, and Changes in Net Position (Unaudited) OPERATING REVENUES Wastewater residential $ 35,988,164 $ 34,091,356 $ - $ - Wastewater commercial and public authorities 18,574,132 18,012, Surface water ,625,799 24,879,325 Other revenues 988, , , ,081 Total operating revenues 55,550,590 52,867,995 26,774,241 25,070,406 OPERATING EXPENSES Business operation detail: Revenue and accounting (1,373,431) (174,555) (1,301,019) (347,621) Community relations 266, , , ,260 Assessment 1,562, , , ,505 Business operation 2,383,899 1,186,080 1,876, ,956 Source control 1,251,939 1,277,091 1,728,037 1,957,140 Customer service 617, , , ,336 Wastewater treatment by other 2,272,825 2,170, CTP parts room 105,127 99, Biosolids operation 609,866 2,353, Business operation 7,696,965 8,583,697 3,572,473 3,481,576 Operations and maintenance detail: Plant #1 6,650,720 5,255, Biosolids maintenance 92, , Plant #3 866, , Pumping 1,688,058 1,524, , ,174 Transmission 4,982,848 4,459,179 2,787,601 2,721,999 Plant #1 maintenance 5,664,480 4,466, Administration 378, , Plant #3 maintenance 756, , Holding basins ,055 9,272 Operations and maintenance 21,080,586 17,644,874 3,093,968 2,959,445 Science & engineering detail: Wastewater November Year-to-Date Surface Water November Year-to-Date Engineering 2,249,269 2,175, Environmental program - - 3,822,817 3,238,372 Construction support 454, , , ,306 Laboratory 1,023,157 1,154, , ,825 Site development 88, Asset management 66,589-86,070 - Open space ,203 - Private development ,503 (18,583) Natural Resource Damage Consent Decree (NRDA) ,861 10,039 Detention ponds - - 1,945 6,657 Expense construction 570, , ,685 Science & engineering 4,452,540 3,622,315 6,488,769 4,311,301 Total divisional operating expenses 33,230,091 29,850,886 13,155,210 10,752,322 These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 14

17 City of Tacoma, Washington Environmental Services Department Wastewater and Surface Water Management Statements of Revenues, Expenses, and Changes in Net Position (Unaudited) Wastewater Surface Water November Year-to-Date November Year-to-Date OPERATING EXPENSES (Continued) Other expenses detail: Insurance $ 383,833 $ 372,269 $ 42,151 $ 41,242 Taxes 707, , , ,879 IT services 1,926,262 1,861,557 1,048,253 1,026,958 Customer service 1,599,454 1,700,121 1,848,527 1,735,183 Other 4,616,752 4,893,564 3,327,120 3,161,262 Depreciation 10,001,412 9,625,069 3,009,030 2,744,097 Total operating expenses 47,848,255 44,369,519 19,491,360 16,657,681 Net operating income 7,702,335 8,498,476 7,282,881 8,412,725 NONOPERATING REVENUES (EXPENSES) Investment income 312, , , ,752 Rental income 192, , , ,872 Bond interest expense, net of capitalized interest (700,405) (570,509) (2,147,119) (2,354,267) Interest on long-term debt - State Revolving Loans (960,188) (1,019,033) (11,300) (11,815) Interest on capital lease (733,084) (744,436) (630,795) (640,563) Amortization of premium, discount, and refunding costs 52,399 52, , ,120 Other nonoperating revenues 18, ,762 5, Other nonoperating expenses (6,471) (137,908) (3,495) (43) Total nonoperating expenses (1,824,235) (1,570,707) (2,201,579) (2,300,478) CHANGE IN NET POSITION Net position before capital contributions and transfers 5,878,100 6,927,769 5,081,302 6,112,247 Contributions: Cash 16, , ,657 Capital related grants - - 1,154, ,161 Donated fixed assets - 89, , ,966 Transfers - capital related (103,375) (2,000) (43,241) 77,575 Transfers - operating related - (118,781) - (49,254) Transfers - gross earnings tax (4,445,684) (4,339,472) (2,175,557) (2,019,990) CHANGE IN NET POSITION 1,345,791 2,557,081 4,342,078 4,623,362 TOTAL NET POSITION- BEGINNING 287,093, ,274,611 99,264,654 83,212,340 TOTAL NET POSITION- ENDING $ 288,439,557 $ 288,831,692 $ 103,606,732 $ 87,835,702 These statements should be read in conjunction with the Notes to Financial Statements contained in the previous yearend Financial Report. 15

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19 The City of Tacoma does not discriminate on the basis of disability in any of its programs, activities, or services. To request this information in an alternative format or to request a reasonable accommodation, please contact the City Clerk s Office at (253) TTY or speech to speech users please dial 711 to connect to Washington Relay Services.

Wastewater and Surface Water Management Financial Report September 2014

Wastewater and Surface Water Management Financial Report September 2014 City of Tacoma Environmental Services Prepared by Eun Joo Ebenhoh Table of Contents Management s Discussion and Analysis... 3 Joint